Challenge

Phorest launched in Ireland in 2004 with an SMS-based appointment booking solution for salons that reduced no-shows. From there, the company branched out into other geographic markets and expanded its range of software solutions to include digital marketing tools, branded booking apps, branded ecommerce stores, and more.

In 2016, Phorest added an integrated payment solution, PhorestPay, to process in-person payments for services and retail sales in the US. This addition was part of Phorest’s commitment to simplifying operations for its clients by offering an all-in-one system. As PhorestPay gained traction, the company saw the opportunity to expand and enhance the service to better support its customers and increase the company’s own revenue. First, though, Phorest needed to find a new payment partner.

To offer PhorestPay to all its customers, Phorest needed a partner that would allow it to easily expand into new countries, handling both local payment processing along with each country’s compliance and regulatory requirements during customer onboarding. In addition, that new partner’s platform needed to be flexible enough to accommodate the payout flows of Phorest’s salon customer base—making it easy to split funds among salon owners, employees, and self-employed stylists. As it stood, salons could either ask customers served by self-employed stylists to execute two transactions at the end of a visit—one with the salon and one directly with the stylist—or ask the stylists to wait for weekly payouts to get access to their income.

Another key goal was finding a partner with more developer-friendly technology that would allow Phorest to customize its checkout and payment integration. That way, the company could better control the overall experience while allowing salon customers to maintain a custom look and feel for their online checkout pages.

Flexibility and development capabilities were also important for Phorest’s longer-term goal of continually enhancing PhorestPay with new features and services. The ideal partner would enable Phorest to pursue potential growth opportunities, such as the ability to process in-person payments that account for 90% of salon transactions. A better technology platform would also help Phorest adapt to changing regulations and business trends in the salon industry to help ensure PhorestPay remained a full-service solution for their customers.

Solution

In 2020, Phorest integrated PhorestPay with Stripe Payments and Stripe Connect, a solution for routing payments between multiple parties. Besides having the requisite global reach, Stripe impressed Phorest with its easy integration. “From my product and development perspective, ease of integration was a key driver for choosing Stripe,” said Gerry O’Doherty, Phorest’s head of product for payments.

Phorest used Stripe Connect to operate PhorestPay in all 10 countries where it had a presence. And by using Stripe-hosted onboarding, Phorest offloaded the regulatory burden of managing Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements to Stripe.

Using Connect’s flexible fund routing capabilities and Stripe’s simplified onboarding experience, Phorest was able to set up a separate connected account for each salon and worker that would receive funds from payments processed through PhorestPay. Phorest was also able to develop a new solution for self-employed staff that automatically divides funds from the client payment between the worker and the salon.

Phorest built custom checkout pages for their salon customers that offered a fully branded payment flow powered by Stripe processing technology on the backend. That way, salon clients could pay for their services without being redirected to a third-party site.

Phorest implemented Stripe with assistance from Stripe professional services to ensure it met its deadline. The professional services team gave Phorest a clearer view of the project, helping Phorest to determine key priorities and tackle the implementation quickly and efficiently.

After rolling out the new iteration of PhorestPay’s online payments platform to customers in all of its international markets, Phorest turned its attention to developing a POS solution that would allow its 12,000 customers to accept in-person payments. “In our industry, the vast majority of transactions take place in the salon when the client receives the service, so we needed to launch a solution for accepting in-person payments,” said Mark Ronayne, Phorest’s head of payments.

Phorest took advantage of Stripe’s in-person payments solution, Stripe Terminal, to expand PhorestPay’s capabilities to include on-premises transactions. To get the solution up and running quickly, Phorest shipped Terminal card readers directly from Stripe to the salons. The new feature improved the user experience by giving them a single solution for processing online and in-person transactions and consolidating all the salon’s payment data into one place. “Unifying in-person and online payments makes life a lot easier for our salons, especially when it comes to reconciliation,” O’Doherty said.

Adding Terminal to their Stripe implementation also helped Phorest navigate recent changes in regulations covering tips in the UK and Ireland. In the UK, Terminal enabled Phorest clients to tip stylists directly, ultimately simplifying the tipping process, while still remaining compliant with these new regulations. In Ireland, employers must issue statements to their employees reflecting the total amount of tips received and the portion passed on to employees within 10 days of distribution. Without adequate technology to manage these requirements, some establishments were faced with the prospect of only accepting cash tips, or eliminating tipping altogether.

In response, Phorest used a Terminal feature called Collect Inputs, part of a suite of prebuilt and custom elements, to develop a solution that allows clients to pay the service fee and tip individual service providers in one low-friction transaction. The tipping tool gives clients the option to ensure that employees receive 100% of any tips they receive, and tips are routed directly to the individual service providers’ own PhorestPay accounts almost instantly. Because the tip portion of the payment skips the employer’s account, the employer saves on fees and red tape while complying with the new rules.

Results

PhorestPay user base grows ninefold; revenue increases fourfold

By using Stripe to bring PhorestPay to all its customers around the globe, Phorest tapped into a huge new audience for its payment solution. Since October 2020, PhorestPay’s user base has increased by 866% and revenue has grown by 335%.

Salon teams onboarded in less than two minutes

Stripe-hosted onboarding, which automatically adapts to the user’s relevant country and language and is optimized for simplicity, drastically reduced onboarding time. “It takes less than two minutes for salon employees and self-employed stylists to fully onboard with Stripe; we timed it,” said Ronayne. “That’s great for go-to-market.”

Self-employed stylists gain next-day access to payouts with connected accounts

Phorest used Connect to develop a solution tailored to the needs of self-employed stylists. It offers a single, simple transaction for the customer and next-day access to funds for the stylist. Plus, it reduces salons’ transaction fees.

In-person payments drive incremental volume and margin growth

Since adding Terminal, in-person payments now account for the majority of Phorest’s incremental volume and margin growth each month.

One thousand card readers delivered in six weeks

Stripe reduced the logistical challenges that typically arise when a company adds a new POS solution by shipping most card readers directly to Phorest’s salons. “It’s been nice not to have to take delivery of stock and dispatch them ourselves,” said Ronayne.

Tipping solution increases tips by 25%

With PhorestPay’s tipping solution, PhorestTips, salons can accept electronic tips in compliance with the legislation. But employees and self-employed stylists have been the biggest winners: Phorest has seen the new tipping solution increase the total value of their tips by up to 25%.